In Short
- Companies in a group should use a formal written licence to use intellectual property (IP), such as trade marks, to avoid risks like infringement.
- A clear intercompany licence agreement protects the brand, clarifies use, and prevents disputes.
- Proper documentation ensures IP assets are properly protected, reducing legal uncertainty and increasing the company’s value during due diligence.
Tips for Businesses
Set up an intercompany trade mark licence agreement to clarify how logos and brand names can be used across group companies. Ensure the licence outlines terms like duration, permitted uses, and termination provisions. Always seek legal advice to ensure IP rights are safeguarded, especially when sharing valuable assets within the group.
Summary
This article explains the importance of having a well-drafted intercompany trade mark licence agreement when sharing logos and brand names within a corporate group. It highlights the need for a written, formal agreement to prevent risks and protect intellectual property, offering practical tips on drafting and ensuring clear ownership. Prepared by LegalVision, this guide helps businesses ensure their IP strategy is both legally sound and efficient.
On this page
- Considering IP Protection in Group Companies
- Is a Licence Required to Use Trade Marks Within a Group?
- How Can an Intercompany Licence Agreement Protect Your Business?
- Key Contract Drafting Considerations For Your Group Trade Mark Licence
- Seeking Bespoke Legal Advice on Your Brand Strategy and Sharing
- Key Takeaways
- Frequently Asked Question
Companies within a corporate group will often seek to use the same brand name and logo to maintain consistency and strengthen their market position. However, because each company is a separate legal entity, important legal questions arise regarding the sharing of brand names and logos within the group.
It is possible for companies to own intellectual property together, but joint ownership can be complex. Because of this, companies often choose to license the use of brand names and logos. In this article, it is assumed that one company in the group owns the brand names and logos, and another wants to use them in its branding or trading name.
This article considers how to set up this arrangement and why having a clear intercompany trade mark licence agreement is important.
LegalVision’s Trade Mark Essentials Guide provides valuable information for any business looking to register or enforce a trade mark.
Considering IP Protection in Group Companies
Each company in a group is its own legal entity. Groups can set up specific structures from the start to help manage intellectual property risks. For example, shareholders might own a parent or holding company, which in turn owns the operating companies. The operating companies usually handle trading, while the holding company owns key assets such as the group’s intellectual property.
This setup can help protect valuable intellectual property, like trade marks, by keeping them within the holding company. If an operating company faces financial problems or creditor claims, the holding company’s assets are usually kept separate and protected.
It is sensible to seek legal and tax advice before setting up a company group structure like this. This is important to ensure that the structure is fit for purpose and tax efficient.
Is a Licence Required to Use Trade Marks Within a Group?
It can be common for a company to want to use a trade mark, such as a logo owned by another company in the group, for branding purposes or other reasons. A key question is whether a company needs a formal written licence to use a trade mark registered to another company in the group.
Under law, a licence of a registered trade mark must be in writing and signed by, or on behalf of, the trade mark owner to be legally effective. Trademark infringement happens when someone uses a mark without the owner’s consent.
If a group company can show it has permission to use the mark, that consent might prevent an infringement claim, even if the agreement was informal. However, relying on informal consent can create uncertainty. A written agreement is important as it serves as key evidence if the arrangement is ever questioned and can clarify:
- how the mark can be used
- in what form the mark can be used;
- Where the mark can be used; and
- how long the mark can be used.
In practice, a third-party buyer or investor looking at the licensee company will usually expect to see a properly documented licence during due diligence. If the licensee company is unsure about how it can use the mark and uses it incorrectly or inconsistently, this can weaken the trade mark’s protection.
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How Can an Intercompany Licence Agreement Protect Your Business?
In simple terms, an intercompany intellectual property licence lets companies in the same group, like a holding company and an operating company, use intellectual property. It is a legal agreement that allows one company to use another’s intellectual property. This approach lets the group use valuable intellectual property assets.
By setting clear rules for use, the licence helps protect the value and integrity of the intellectual property. It does this by:
- allowing the use of intellectual property;
- reducing the risk of disputes; and
- clearly defining ownership and permitted uses.
This document is especially useful for letting group companies use trade marks, such as logos and brand names.
Key Contract Drafting Considerations For Your Group Trade Mark Licence
Your licence should cover several important points, including:
- which trade marks are licensed;
- the permitted business activities;
- the duration of the licence and termination provisions;
- rules to protect the trade mark and ensure consistent use;
- confirmation of ownership; and
- addressing sensitive issues such as confidentiality obligations
Seeking Bespoke Legal Advice on Your Brand Strategy and Sharing
Sharing a brand within a group might seem simple, but problems can come up if it is managed informally.
A documented and carefully written intercompany trade mark licence agreement can give you a clear legal framework. It can enable group companies to use intellectual property while protecting ownership and preventing risk. Seeking advice can help protect your intellectual property’s value and enable confident use of logos and brand names across your group.
Key Takeaways
It is important to consider how intellectual property, like trade marks, is held within a corporate group. If one company owns a trade mark and another wants to use it in its branding or trading name, a written and signed licence should be put in place to help protect the businesses from risk. Clear and well-drafted intercompany licences protect ownership, define how trade marks can be used, and help preserve brand value across the group.
LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced intellectual property lawyers help businesses manage contracts, employment law, disputes, intellectual property and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Question
You may be able to do this. If your name is unique and distinctive and not already registered or too similar to an existing mark, you may be able to apply to register it as a trade mark.
If one company owns the trade mark and another seeks to use it, a written licence is important. It protects brand ownership, clarifies how the mark can be used and reduces overall risk.
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